The Washington Report
October 10, 2018
PBGC Releases Final Rule on Owner-Participant Changes to Guaranteed Benefits and Asset Allocation
On October 2, 2018, the Pension Benefit Guaranty Corporation (PBGC) released a final rule amending its regulations on guaranteed benefits and asset allocation. These amendments incorporate statutory changes to the rules for participants with certain ownership interests in a plan sponsor.
The final rule amends PBGC’s benefit payment regulation by replacing the guarantee limitations applicable to substantial owners with a new limitation applicable to majority owners. Additionally, this final rule amends PBGC’s asset allocation regulation by prioritizing funding of all other benefits in priority category 4 ahead of those benefits that would be guaranteed but for the new limitation. The rulemaking also clarifies that plan administrators may continue to use the simplified calculation in the existing rule to estimate benefits funded by plan assets, as well as providing new examples to aid in implementation. The final rule is effective November 2, 2018. Please refer to the rule for additional applicability dates.
The final rule is available here.
IRS Issues Employer Guidance on Paid Family and Medical Leave Tax Credit
The Internal Revenue Service (IRS) recently issued Notice 2018-71 providing employers with guidance on the paid family and medical leave tax credit pilot program that was enacted in 2017. Under the pilot program, employers that provide paid Family and Medical Leave Act benefits to certain employees in 2018 and 2019 are eligible for a general business tax credit under Code Section 45S. The Notice contains 34 questions and answers, and the IRS plans to issue proposed regulations on the program.
The Aon bulletin, which provides a brief overview of IRS Notice 2018-71, can be found here.
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